Funding battle begins with House bill on regulators, agencies

WASHINGTON (Reuters) - The first shots in a political battle over funding for a range of federal activities rang out during a congressional subcommittee hearing on Wednesday, as Republicans and Democrats took opposing stances on a budget bill for financial regulators and other agencies.

The legislation, which covers funding for the Securities and Exchange Commission, the Treasury Department, the judiciary branch and others, passed the House of Representatives Financial Services Subcommittee and now goes to the full Appropriations Committee. It then must win approval from the Republican-dominated House before being reconciled with a Senate version into a single bill for President Barack Obama to sign.

Democrats at Wednesday's meeting made it clear they will press for changes at every step of the lawmaking process, saying the current bill is loaded with ideological policy "riders" that do not belong and that it could cripple important government work.

Republicans, meanwhile, said the bill would reign in spending, make bodies such as the Consumer Financial Protection Bureau more accountable and boost funding for important issues.

"We cut funding for nearly two dozen agencies that can operate with a little less," said Republican Ander Crenshaw of Florida, the subcommittee chairman, adding that the cuts helped free up more money for antidrug trafficking efforts, the Small Business Administration, and the Treasury Department's Offfice of Terrorism and Financial Intelligence.

In total, the bill drops funding by 6.5 percent from current levels for all agencies, including the General Services Administration and the Internal Revenue Service, which bear "the brunt of the reduction" because "they are the largest agencies in the bill and both have a recent history of inappropriate behavior," Crenshaw said.

Republicans want to shake up the IRS after a 2013 scandal in which it allegedly targeted conservative Tea Party groups.

The bill would also shave $50 million from the SEC's budget.

Representative Nita Lowey, a Democrat from New York, said the lower funding in the legislation "would allow more tax cheats to go undetected" and thwart the SEC in protecting investors.

"The long list of riders turns a bad bill into an example of the Republican majority's unnecessary culture war," she added, citing provisions to block the Federal Communications Commission's internet neutrality rule and to limit health coverage of abortions for federal employees.

Calling the riders "unnecessary, unwarranted, and unhelpful," the senior Democrat on the subcommittee, Jose Serrano of New York, said "they are an effort to appease the right wing of the right wing."